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VA Linux Systems Updates Financial Outlook

Apr 26, 2001, 22:30 (11 Talkback[s])

VA Linux has announced that its expected revenue for its third fiscal quarter will likely be in the range of $18 to $20 million. In February, the company announced it expected revenues to be "below $30 million."

According to the announcement, the company continues to have problems selling hardware, but says there are indications that demand is increasing for its web content/conferencing services (Open Source Development Network) and consulting business.

From the press release:

VA Linux Systems (NASDAQ:LNUX) today announced that it expects revenue for its third fiscal quarter, ending April 28, 2001, to be in the range of $18 to $20 million. This is an update of the outlook provided during VA's February 20, 2001 conference call, when the Company indicated a revenue expectation for the quarter of below $30 million.

The net loss for the quarter, on a pro forma basis, excluding non-cash and non-recurring charges, is expected to be in the range of $0.39 to $0.41 per share. As previously indicated, the Company will record an extraordinary restructuring charge in the quarter to reflect the costs of headcount reductions and other restructuring activities taken earlier in the quarter in response to the economic slowdown."

While we are seeing some signs that demand is improving for our consulting services and Open Source Development Network, the slowdown in customer IT purchasing continues to impact systems sales," said VA Linux Systems CEO Larry M. Augustin. "Earlier this quarter, we took significant measures to address the current economic slowdown, including cost-cutting actions and improvements to our management structure. We are progressing towards our previously stated staffing and spending reduction goals. These steps and our strong cash position will allow us to weather the current cycle, so we can capitalize on increasing demand for Linux and Open Source solutions as the economy improves."

Actual results will be announced on May 22, 2001, after the market closes, followed by a 2:00 pm (Pacific) conference call.

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